Virgin Media - Full Year and Fourth Quarter 2012 Results
A YEAR OF STRONG CUSTOMER GROWTH
LONDON--(BUSINESS WIRE)-- Virgin Media Inc. (NASDAQ: VMED; LSE: VMED) announces results for the year and quarter ended December 31, 2012.
Solid financial performance
- Revenue up 2.7% to £4,101m for the year; up 1.6% to £1,040m for the quarter
- OCF1 up 4.0% to £1,654m for the year; up 4.4% to £442m for the quarter
- Operating income of £699m for the year; £209m for the quarter
- FCF2 down 4.9% to £473m for the year; down 1.4% to £138m for the quarter
- Net cash provided by operating activities of £1,040m for the year; £232m for the quarter
- Average number of shares in issue reduced 12% in the year with the repurchase of 21m shares
Multiple sources of high quality revenue growth
- Cable revenue up 3.0% for the year; up 3.8% in the quarter
- Net cable customer additions of 88,700 in the year, 42,700 in the quarter
- Cable ARPU up 2.1% to £48.87 in the quarter
- On-going improvement of customer base mix in the quarter
- TiVo customers increased 896,900 in the year, 187,300 in the quarter
- Paying TV customers3 increased 210,000 in the year, 59,900 in the quarter
- Superfast broadband customers (30Mb and above) increased 1.5m in the year, 419,400 in the quarter
- Business division revenue up 5.2% for the year; down 4.5% in the quarter
Neil Berkett, Chief Executive Officer of Virgin Media, said: "2012 was a year of record cable customer growth, where mainstream demand for superfast broadband and TiVo has led to lower churn and a strong increase in new subscribers. Combined with growth in our business division, we have delivered solid financial progress."
Note: The notes preceding the Appendices relating to non-GAAP financial measures and other matters and the Appendices to this earnings release are considered an integral part of the financial and operational information in this release. Financial and statistical information is as at and for the three months ended December 31, 2012, unless otherwise stated. Comparisons of financial and operating statistics are to the fourth quarter of 2011, unless otherwise stated. Where financial information is given for the year ended December 31, 2012, any comparisons are to the year ended December 31, 2011 unless otherwise stated.
Conference call details
There will not be a conference call to specifically discuss these results. However, there will be a conference call to discuss the combination transaction with Liberty Global, Inc. Details of that conference call can be found in the press release detailing that transaction.
On February 5, 2013, Liberty Global, Inc. and Virgin Media Inc. announced that they had entered into an agreement, subject to shareholder approvals, pursuant to which Liberty Global, Inc. will acquire Virgin Media Inc. in a stock and cash merger. For further information, please see the press release announcing the proposed merger and other documents filed or to be filed with the SEC as further detailed at the end of this release.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Lynx Europe Limited, a company that has been established in connection with the transaction, will file a registration statement with the Securities and Exchange Commission (SEC), which will include a joint proxy statement of Virgin Media Inc. and Liberty Global, Inc. VIRGIN MEDIA STOCKHOLDERS ARE ADVISED TO READ THE REGISTRATION STATEMENT/JOINT PROXY STATEMENT WHEN IT BECOMES AVAILABLE (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors may obtain a free copy of the registration statement/joint proxy statement (when it becomes available) and other relevant documents filed by Liberty Global and Virgin Media with the SEC at the SEC's Web site at http://www.sec.gov. The joint proxy statement and such other documents filed by Virgin Media with the SEC may also be obtained for free from the Investor Relations section of Virgin Media's web site (www.virginmedia.com) or by directing a request to Virgin Media Limited, Media House, Bartley Wood Business Park, Hook, Hampshire, RG27 9UP, UK, Attention: Investor Relations. Copies of documents filed by Liberty Global with the SEC may also be obtained for free from the Investor Relations section of Liberty Global's website (www.lgi.com) or by directing a request to Liberty Global, 12300 Liberty Boulevard, Englewood, Colorado 80112, Attention: Investor Relations.
Virgin Media and Liberty Global and their respective directors, executive officers and other members of their respective management and employees are deemed to be participants in the solicitation of proxies from their respective stockholders in connection with the proposed transaction. Information concerning the interests of Virgin Media's participants in the solicitation, which may be different than those of Virgin Media's stockholders generally, is set forth in Virgin Media's proxy statement relating to its 2012 annual meeting of stockholders filed with the SEC on April 30, 2012. Information concerning the interests of Liberty Global's participants in the solicitation, which may be different than those of Liberty Global's stockholders generally, is set forth in Liberty Global's proxy statement relating to its 2012 annual meeting of stockholders filed with the SEC on April 27, 2012. Additional information regarding the interests of those deemed participants in the proposed transaction will be included in the registration statement/joint proxy statement to be filed with the SEC in connection with the proposed transaction.
Various statements contained in this release may include "forward-looking statements", both with respect to us and our industry, that reflect our current views with respect to future events and financial performance Words like "believe", "anticipate", "should", "intend", "plan", "will", "expects", "may", "estimates", "projects", "positioned", "strategy", and similar expressions identify these forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or budgeted, whether expressed or implied, by these forward-looking statements.
These factors include the following factors relating to the proposed transaction:
- The ability to obtain governmental and regulatory approvals of the transaction on a timely basis;
- Failure to realize the anticipated benefits and synergies of the transaction, including as a result of a delay in completing the transaction or an increase in costs associated with integration or a delay or difficulty in integrating the businesses of Virgin Media and Liberty Global;
- Limitation on the ability of Lynx Europe Limited, Liberty Global and/or Virgin Media to incur new debt in connection with the transaction;
- Any disruption from the proposed transaction making it more difficult to maintain relationships with customers, employees or suppliers;
- The outcome of litigation which may arise in connection with the transaction;
- Failure to receive the approval of the stockholders of either Liberty Global or Virgin Media for the transaction; and
- The impact of legislative, regulatory and competitive changes and other risk factors relating to the industry in which Virgin Media and Liberty Global operate, as detailed from time to time in the reports of Virgin Media and Liberty Global filed with the SEC.
In addition, factors relating to the ordinary course operation of our business are discussed under "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2011, or the 2011 Annual Report, as filed with the U.S. Securities and Exchange Commission, or SEC, on February 21, 2012 and on Form 10-Q for the three months ended September 30, 2012 as filed with the SEC on October 31, 2012. We assume no obligation to update our forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements. Virgin Media cautions that the foregoing list of important factors that that may affect future results is not exhaustive.
SUMMARY FINANCIAL RESULTS
|3 Months ended||Year ended|
|Dec 31, 2012||Dec 31, 2011||Dec 31, 2012||Dec 31, 2011|
|Consumer segment - Total||874.4||850.6||3,430.2||3,354.4|
|Net cash provided by operating activities||232.1||294.4||1,039.7||1,149.1|
SELECTED CONSUMER OPERATIONS STATISTICS
|Dec 31, 2012||Dec 31, 2011||Dec 31, 2012||Dec 31, 2011|
|Consumer cable customers||4,894.3||4,805.6||4,894.3||4,805.6|
|Consumer cable products|
|Mobile - contract||1,708.9||1,523.9||1,708.9||1,523.9|
|3 Months ended||Year ended|
|Dec 31, 2012||Dec 31, 2011||Dec 31, 2012||Dec 31, 2011|
|Consumer cable customer net additions||42.7||15.0||88.7||5.6|
|Net consumer cable product additions (disconnections)|
|Mobile - contract||38.0||102.5||185.0||313.1|
|Cable ARPU (4)||£48.87||£47.85||£48.34||£47.31|
|Mobile ARPU (5)||£15.13||£15.46||£14.91||£14.91|
A year of sustainable revenue growth
Total revenue for the year was up 2.7% to £4.1bn. Gross margin6 expanded to 60.3%, while SG&A increased by 2.7%, mainly due to a planned increase in marketing expenses. This resulted in OCF increasing by 4.0% to £1,654m. Operating income rose 29% to £699m.
Free Cash Flow was down 4.9% to £473m for the year as OCF growth and lower interest expense was offset by the an incremental £102m investment in our broadband speed upgrade programme. Net cash provided by operating activities was down 9.5% to £1,040m.
We repurchased 20.5m shares during the year, reducing our average share count by 11.5%.
Improved cable revenue growth
Full year consumer cable revenue increased by 3.0% to £2.8bn driven by 2.2% cable ARPU growth and 1.8% growth in the customer base during the year. Consumer cable revenue growth for the quarter was 3.8%,
Cable customer net additions were 88,700 in the full year which is a record for Virgin Media and a significant improvement on the 5,500 added in 2011. Net additions for the quarter were 42,700 with gross additions increasing 2.8% while gross disconnections fell 11.7%, a year-on-year improvement for the fifth quarter in a row. This led to churn improving from 1.3% to 1.1%.
We added a net 112,700 triple-play customers in the year and 36,800 during the quarter, increasing triple-play penetration to 64.9% compared to 63.7% a year ago.
Strong demand for superfast broadband and TiVo
A year ago we introduced new product "Collections" which included superfast broadband, TiVo and HD TV as standard. These were created to meet increasingly widespread consumer demand for better connectivity and next generation entertainment by further differentiating our products from those of our competitors.
During 2012, the number of customers on superfast speeds (30Mb and above) increased by 1.5m, including 419,400 during the last quarter, taking the total to 2.176m or 51% of our broadband base. Total broadband net additions in the year were 169,300, with 62,700 in the quarter compared to 30,000 a year ago.
Demand for even faster speeds remains strong with around 41% of new broadband subscribers taking speeds of 60Mb or higher during Q4. Our programme to double the broadband speeds of over 4m customers is on track with 76% of our network upgraded for the new faster speeds.
At the same time, the recognized appeal of our TiVo service is driving pay TV growth. We added 896,900 more TiVo customers during 2012, including 187,300 in the fourth quarter to reach a total of 1.33m or 35% of our TV customer base. This uptake has helped to drive the overall number of paying TV customers, which increased by 210,000 in the year, including 59,900 in the final quarter.
We launched our Virgin TV Anywhere service towards the end of the year which allows our TV customers to stream up to 45 live channels to tablets and smartphones, with even more content available online, including thousands of hours of on demand programming. It also allows Virgin Media TiVo customers to connect to their TiVo boxes to manage their recordings wherever they are.
We continue to add more TV content to all our entertainment services. After the period end, we introduced two further HD channels from Turner Broadcasting, bolstering the total number of HD channels available to our customers to 39.
Mobile - continued contract revenue growth
Full year mobile revenue was £554.8m, which was relatively flat compared to 2011 as strong contract revenue growth was offset by prepay revenue decline and regulatory changes to mobile termination rates ("MTR"). Contract service revenue increased 8.9% to £399.8m in 2012, while prepay service revenue declined by 18% to £140.7m. The MTR change reduced the amount of inbound mobile revenue we received by approximately £24.1m. Mobile revenue would have increased by approximately 4.5% excluding this regulatory factor. Due to a similar associated reduction in interconnect costs for our mobile and fixed line businesses from these regulatory rates changes, the impact on group OCF of the MTR changes was broadly neutral.
Mobile revenue grew by 0.6% or £0.9m in the quarter as a 4.6% growth in contract service revenue to £102.3m was offset by a 16% prepay service revenue decline to £34.9m and an approximate £6.5m regulatory MTR impact.
We increased our contract mobile base by 38,100 in the quarter. The total contract base increased 12% from a year ago to 1.7m, while our prepay subscriber base reduced by 32,100 compared to a decline of 53,500 in the comparable period last year.
At the quarter-end, we had approximately 834,600 cable households with at least one Virgin Mobile contract, which is up 15% year-on-year. These homes had around 1.2m contract mobiles. We also estimate we have a further 202,500 cable households with at least one of our prepay phones, meaning total mobile penetration of the cable base is around 21%, providing further significant growth opportunities to cross-sell to the remaining 79%.
Quad-play penetration, where a household takes all three cable products and at least one mobile phone service, increased to around 15.8% of our residential cable customer base, compared to around 14.5% a year ago. We have approximately 774,600 quad-play customers, which is up 11% year-on-year.
Growing Business data
Full year Virgin Media Business ("VMB") revenue was £670.3m, up 5.2% on 2011 mainly due to growth in data revenues. VMB accounted for 30% of group revenue growth. We have continued to make steady progress during the year with new product launches and strategic contract wins.
In the quarter, VMB revenue was £165.3m, down 4.5% mainly due to declining voice revenues and reduced wholesale data revenue partially offset by growth in retail data.
During the quarter, we concluded agreements to enhance our provision of high capacity connectivity to two existing customers, by modifying or extending these tailored solutions. At the same time we negotiated separate agreements for the provision of offnet, last mile Ethernet circuits from both counterparties, which gives us greater choice and therefore lower costs going forward when looking at providing off net solutions for our business customers.
On signing these high capacity connectivity agreements we became entitled to a combined £12 million under these contracts as up front cash payments. We have recognized these payments as deferred revenue on our balance sheet, rather than immediately in our profit and loss account. We expect to recognise substantially all this deferred revenue and OCF in our profit and loss account over the next three years.
VMB will also be linking up public sector organisations across Yorkshire and Humberside as part of a brand new Public Services Network (PSN) initiative. The network is one of the first PSN projects to be delivered through the Government's PSN connectivity and services frameworks and has the potential to connect up to 52 public service providers including local authorities, health, police and other services.
Retail data revenue was up 2.2% to £75.0m in the quarter. Retail voice revenue was down 14% to £33.8m, reflecting a continuation of the structural decline in this area. Wholesale data revenue was down 5.3% at £43.1m. Wholesale data revenue in the fourth quarter of 2011 had been particularly high. Wholesale voice revenue was down £2.2m at £5.0m. Local Area Network Solutions and other revenue was flat at £8.4m.
RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2012
Comparisons of financial and operating statistics are to the fourth quarter of 2011, unless otherwise stated.
Total revenue was up 1.6% to £1,040m, due to consumer revenue growth partially offset by a fall in business revenue.
OPERATING COSTS AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A)
Operating costs (exclusive of depreciation) were £405.8m, up 0.7% as higher consumer cost of sales were partially offset by lower business cost of sales and lower network and other operating costs. Gross margin percentage grew slightly from 60.6% to 61.0%.
SG&A fell by 2.7% to £191.7m reflecting lower employee and outsourcing and other costs, partially offset by increased marketing and facilities costs.
OPERATING INCOME BEFORE DEPRECIATION, AMORTIZATION, GOODWILL AND INTANGIBLE ASSET IMPAIRMENTS AND RESTRUCTURING AND OTHER CHARGES (OCF)
OCFwas up 4.4% at £442.2m, mainly due to improved revenue and gross margin and reduced SG&A expenses.
Operating income increased 25% to £208.6m, mainly due to the growth in revenue and gross margin, reduced SG&A and reduced amortization expense.
Depreciation expense was up 2.8% at £235.0m. The increase in depreciation expense was primarily a result of depreciation in respect of fixed asset additions with a generally shorter useful economic life than existing assets, combined with the acceleration of depreciation on certain assets that will no longer be required as a result of our re-tiering program, partially offset by fixed assets becoming fully depreciated.
No amortization expense was incurred, compared to £28.1m in the same quarter last year, as all intangible assets subject to amortization became fully amortized in the fourth quarter of 2011.
Income tax benefit
Over the last two decades we have invested over £13bn building our cable network and have incurred losses in operating that infrastructure. Under UK tax law certain of these investment costs and operating losses are offset against future operating profits, giving rise to deferred tax assets. We have historically recorded a full valuation allowance to reduce the value of these assets to zero.
Under US GAAP accounting principles, we are required to continually evaluate the need for a valuation allowance and have determined it is more likely than not that in future we will generate sufficient pre-tax income to utilise substantially all of our UK deferred tax assets related to unclaimed capital allowances and net operating losses. An important factor in our assessment was the fact that during 2012, we moved into a three year cumulative pre-tax profit position in the UK for the first time. Therefore, as required by the applicable accounting rules, we have reduced the valuation allowance, which has resulted in a non-cash income tax benefit of £2.6billion.
Net income was £2.7bn compared to £48.2m in the fourth quarter last year. The improvement was mainly due to the reduction in the deferred tax asset valuation allowance outlined above.
Fixed asset additions (accrual basis)7 in the quarter were down £18.3m to £208.7m. This was mainly due to the fourth quarter of 2011 including £30m in relation to conversion of TiVo operating leases to capital leases for set top boxes received prior to that quarter, together with lower spend on non-upgrade network activities and other projects, partially offset by £36.3m spent on our broadband speed upgrade in the fourth quarter of 2012.
The total purchase of fixed and intangible assets in the quarter was up £33.4m at £210.8m mainly due to a reduction in assets acquired under capital leases. Total purchase of fixed and intangible assets included £51.0m spent on the ongoing broadband speed upgrade programme
Fixed asset additions (accrual basis) in the full year were up 16% to £883.4m mainly due to increased spend on consumer premise equipment and scalable infrastructure related to the rollout of TiVo set top boxes and our broadband speed upgrade. We incurred £114.1m on the broadband speed upgrade programme in the year.
The total purchase of fixed and intangible assets for the year was £783.2m, which included £101.5m spent on the broadband upgrade programme. Excluding this amount, total purchase of fixed and intangible assets was £681.7m, which represents 16.6% of group revenue.
The total amount of fixed assets acquired under capital leases was £10.6m in the quarter. We made principal payments on capital leases of £25.8m and the capital lease balance decreased from £244.2m at the end of the third quarter to £229.0m at the end of the fourth quarter. The interest charge on capital leases was £3.5m during the quarter.
For the full year, the total amount of fixed assets acquired under capital leases was £88.9m, which represented 2.2% of revenue. We made principal payments on capital leases of £97.4m and the capital lease balance decreased from £258.0m to £229.0m during the year. The interest charge on capital leases was £16.0m for the year.
Capital expenditure guidance
It is anticipated that Virgin Media's cash capital expenditure (purchase of fixed and intangible assets) will remain 15% to 17% of revenue for 2013 and for future years. In addition, it is expected that the cost of fixed assets acquired under leases will continue to be no greater than 2% to 3% of revenue per annum, in line with recent years.
FREE CASH FLOW
Free Cash Flow for the quarter was down 1.4% to £137.6m mainly due to higher purchase of fixed and intangible assets, partially offset by increased OCF and lower net interest expense. Net cash provided by operating activities was down 21% at £232.1m mainly due to the premia paid on the redemption of debt partially offset by increased operating income.
During the quarter, we issued $900m of dollar-denominated 4.875% Senior Notes and £400m Senior Notes 5.125%, both due 2022.
The net proceeds were used to repurchase all of our $850m dollar-denominated and €180m euro-denominated 9.50% Senior Notes due 2016, and $93 million of our dollar-denominated 8.375% Senior Notes and £97m of our sterling-denominated 8.875% Senior Notes, both due 2019, and to pay approximately £113m in premia and related fees and expenses.
These transactions allow us to lower our ongoing interest costs and enhance our capital structure, by further extending our amortization schedule.
As of December 31, 2012, total debt consisted of £750m outstanding under our Senior Credit Facility, £1,824m of Senior Notes, £2,582m of Senior Secured Notes, £544m of Convertible Senior Notes and £229m of capital leases and other indebtedness. Cash and cash equivalents were £206m. Net debt8 was £5,723m at the quarter-end.
Interest expense was £94.1m, down 10.8% mainly due to lower average interest rates.
"Safe Harbour" Statement under the Private Securities Litigation Reform Act of 1995
Various statements contained in this document constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. Words like "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "think", "strategy," and similar expressions identify these forward- looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements. These factors, among others, include the following:
- We operate in highly competitive markets which may lead to a decrease in our revenue, increased costs, customer churn or a reduction in the rate of customer acquisition;
- The sectors in which we compete are subject to rapid and significant changes in technology, and the effect of technological changes on our businesses cannot be predicted;
- Our fixed line telephony is in decline and unlikely to improve;
- A failure in our network and information systems could significantly disrupt our operations, which could have a material adverse effect on those operations, our business, our results of operations and financial conditions;
- Unauthorized access to our network resulting in piracy could result in a loss of revenue;
- We rely on third-party suppliers and contractors to provide necessary hardware, software or operational support and are sometimes reliant on them in a way which could economically disadvantage us;
- The "Virgin" brand is not under our control and the activities of the Virgin Group and other licensees could have a material adverse effect on the goodwill towards us as a licensee;
- Our inability to provide popular programming or to obtain it at a reasonable cost could potentially have a material adverse effect on the number of customers or reduce margins;
- Adverse economic developments could reduce customer spending for our TV, broadband and telephony services and could therefore have a material adverse effect on our revenue;
- We are subject to currency and interest rate risks;
- We are subject to tax in more than one jurisdiction and our structure poses various tax risks;
- Virgin Mobile relies on Everything Everywhere's networks to carry its communications traffic;
- We do not insure the underground portion of our cable network and various pavement-based electronics associated with our cable networks;
- We are subject to significant regulation, and changes in the U.K. and EU laws, regulations or governmental policy affecting the conduct of our business may have a material adverse effect on our ability to set prices, enter new markets or control our costs;
- We have substantial indebtedness which may have a material adverse effect on our available cash flow, our ability to obtain additional financing if necessary in the future, our flexibility in reacting to competitive and technological changes and our operations;
- We may not be able to fund our debt service obligations in the future; and
- The covenants under our debt agreements place certain limitations on our ability to finance future operations and how we manage our business;
These and other factors are discussed in more detail under "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended December 31, 2011, or the 2011 Annual Report, as filed with the U.S. Securities and Exchange Commission, or SEC, on February 21, 2012. We assume no obligation to update our forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements.
Please see Appendix F for a reconciliation of all non-GAAP financial measures to their nearest GAAP equivalents.
1 OCF is operating income before depreciation, amortization, goodwill and intangible asset impairments and restructuring and other charges. OCF is a non-GAAP financial measure and the most directly comparable GAAP measure is operating income.
2 Free Cash Flow, or FCF, is OCF reduced by purchase of fixed and intangible assets, as reported in our statements of cash flows, and net interest expense, as reported in our statements of operations. FCF is a non-GAAP financial measure and the most directly comparable GAAP measure is net cash provided by operating activities.
3 Paying TV base is our total TV customer base less those on packages which include a free TV service provided with a non-TiVo set top box.
4 Full year Cable ARPU is calculated by dividing total annual revenue generated from the provision of telephone, television and internet services to customers who are directly connected to our network in that period together with revenue generated form our customers using our virginmedia.com website, exclusive of VAT, by the average number of customers directly connected to our network in the period divided by twelve. The average number of customers is calculated by adding the number of customers at the start of the year and at the end of each month of the year and dividing by thirteen.
5 Full year Mobile ARPU is calculated by dividing total annual mobile service revenue (contract and prepay) for the period by the average number of active customers (contract and prepay) for the period, divided by twelve. The average number of customers is calculated by adding the number of customers at the start of the year and at the end of each month of the year and dividing by thirteen.
6 Gross margin is revenue less operating costs. Gross margin percentage is revenue less operating costs, divided by revenue.
7 Based on closing share price as of February 4, 2013 and 269.3m shares outstanding at December 31, 2012.
8 Net Debt to OCF is Net Debt divided by OCF on a hedged last twelve months basis. It is hedged Net Debt divided by OCF for the last twelve months. Net Debt and Net Debt to OCF are non-GAAP financial measures. See Appendix F for calculations.
9 Fixed asset additions (accrual basis) is the purchase of fixed and intangible assets as measured on an accrual basis, excluding asset retirement obligation related assets. Fixed asset additions (accrual basis) is a non-GAAP financial measure and the most directly comparable GAAP measure is purchase of fixed and intangible assets.
10 Net Debt is long term debt inclusive of current portion, less cash and cash equivalents. Net debt is a non-GAAP financial measure and the most directly comparable GAAP measure is long term debt (net of current portion.)